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As the lifespan of buildings decreases, developers try to adapt

In 1931, glass bottles of sparkling soda began rolling off the assembly line at the Coca-Cola bottling plant in downtown Indianapolis. The architect of the factory is unlikely to have given much thought to the possibility that changing consumption habits will make the glass bottle a relic within a few generations.

Instead of falling into obsolescence, the factory has had several lives. After the Coca Factory closed in 1971, the building was briefly used to house Indy 500 racing cars, then spent decades as a school bus garage before becoming a 139-room boutique hotel anchoring a new entertainment district last year.

A century ago, developers didn’t think much about the future, but today they don’t have the same luxury. A combination of pandemic disruption and ever-changing technologies has brought the distant hazy horizon closer.

As a result, an increasing number of projects are fighting against the clock as profitability and utility are squeezed into the ever shorter lifespan of a commercial building. Statistics illustrating the acceleration of the lifecycle of buildings are scarce, but industry experts are starting to beware.

“The cycle of change is getting shorter,” said Jefferson Duarte, associate professor of real estate finance at Rice University. Projects that developers could have collected rent on for half a century or more no longer allow this.

“Twenty years ago, we didn’t think about it,” Prof Duarte said. There was just a hypothesis that an office building would still function a century later.

Some still are. Few developers believe the Empire State Building will go anywhere soon as it nears its centennial at the end of the decade.

A premium spot or landmark status can overcome obsolescence: areas like Midtown Manhattan or Chicago’s Magnificent Mile seem likely to remain coveted places where short shelf life would not be an issue.

“You could build a barn in Midtown Manhattan and fill it up, because it’s a prime location,” said John Gallander, an independent real estate consultant in Costa Mesa, Calif., Who has overseen the business development portfolios throughout. throughout his career.

Developers are thinking as much about the future as they are now, said Christopher R. King, president and CEO of DPC, a Denver-based commercial real estate developer. DPC has just opened a 250,000 square foot office building in Phoenix and hopes to keep it for six to ten years.

Mr King echoed the concerns of many in the industry that the pandemic had accelerated trends that could shorten the lifespan of buildings. The needs of consumers and workers are changing faster than ever before, due to technology, changing supply chains and expectations for more commodities. Such a rapid cycle is common in retail and restaurant business, but it is relatively new in commercial real estate.

This reduction in lifespan has left architects, developers and investors with a puzzle: how to build for today without becoming obsolete tomorrow?

“I think we have to think about it now,” King said, adding that his company was trying to look ahead by looking at things as diverse as parking garages, office density and technology. ventilation.

“Everyone in the industry is talking about it but going around in circles,” said Gilles Duranton, professor of real estate at the Wharton School at the University of Pennsylvania. “There are all kinds of questions, but few answers.”

The central problem is that commercial construction is an industry producing highly durable goods in a world that demands greater flexibility in the face of changing tastes and economic conditions, Professor Duranton said.

He added that the industry should tackle shortening lifespan through a mix of approaches, including modular elements and construction methods that would allow buildings to be easily dismantled or demolished.

“Sometimes the right thing is to tear things down and rebuild from scratch,” said Professor Duranton.

The acceleration of the natural progression of office space is similar to what has been happening for decades with stadiums and shopping malls, which are coming to the end of their life much faster than in previous generations, said Gallander, the real estate consultant.

The developers, however, are at an impasse. If they stock an office building with too many specific amenities, they run the risk of the latest technology quickly becoming obsolete. (I think of offices with 80s and 90s fax machines with lots of phone hookups.) But if they don’t include enough amenities, they run the risk of potential tenants looking elsewhere.

In a way, the tenant can save the developer, Gallander said. During the Internet boom in the late 1990s, for example, developers weren’t ready to meet the growing need for connectivity. But in many cases, tenants have pushed ahead with redesigns (most leases allow for a liberal office redesign) and additional amenities to meet the challenges of an increasingly connected world. And most law firms have transformed the layout of their offices to accommodate changing technological needs. It can happen again, he said.

The shorter lifespan of buildings may force developers to get their money back faster by selling sooner than expected, Gallander said.

“You might be looking to knock on the exit door after three to five years instead of seven, 10, 15,” he said.

Raising rents is not an option, he said, as the higher cost could push tenants towards cheaper alternatives. Developers can also explore other ways to recoup their investments faster by engaging partners.

At its peak in 1950, the Coca-Cola bottling plant in Indianapolis employed 250 workers and produced two million bottles of Coke filled with fizzy per week. Today it is home to the Bottleworks Hotel, the center of a mixed-use development that opened in late 2020 in hopes of rejuvenating a neighborhood.

Site developer Hendricks Commercial Properties said the pandemic has shown the value of diversification as a bulwark against shorter lifespans of buildings. No one could have predicted that a devastating pandemic would make gathering places so unattractive, at least in the short term. But by combining offices, businesses, hotels and other uses, the risk for Hendricks is extended. The development of Bottleworks has a cinema room with eight screens, for example, but also a technological incubator.

The move towards rapid offloading of properties could pick up speed, said Gavin Thomas, the company’s vice president of development, but Hendricks is here for the long game.

“The Hendricks timeline is not a three or ten year horizon,” he said. “It’s much longer than that, and it changes the dynamics and the criteria for returning.”

But the specter of unforeseen change will color future plans. “Going forward, I will ask how much flexibility we have,” he said.

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‘Georgia is not New York’: Progressives adapt efforts for Senate second round

Neither Jon Ossoff nor Reverend Raphael Warnock endorsed the Green New Deal. But that hasn’t stopped the Sunrise Movement, the climate activist group that defends the radical climate change plan, from rallying in force for Georgia’s two Democrats in their second-round races for the Senate seats.

The group aims to help register 10,000 to 20,000 Georgians who will turn 18 by January 5, election day. He has people on the ground who solicit and submit campaign materials. And while his appeals mention the threat of climate change, he doesn’t present the issue as a litmus test.

“Right now we’re focusing on the big picture,” said Shanté Wolfe, who leads the work of the Sunrise movement in Georgia. “Our effort is for the common good.”

The relentless efforts of the Sunrise movement and other progressive groups in Georgia – on behalf of two candidates who do not share their most ambitious political goals – reflect the urgency that is consuming the left flank of the Democratic Party. Two victories in Georgia would produce a 50-50 tie in the Senate, giving Democrats control of the chamber because Kamala Harris would vote tied for vice president.

Without democratic control, progressive lawmakers, activists and their grassroots supporters fear they will not be able to achieve even a stripped down version of their political wishlist for the country.

But they also understand that for decades Georgia has been a Republican stronghold with large numbers of conservative voters, and their efforts need to be modulated. President-elect Joseph R. Biden Jr. won the state, many Democrats point out, with a moderate agenda that tempered leftist rhetoric and political goals. Mr Biden, Mr Warnock and Mr Ossoff do not support “Medicare for All”, another priority of the left of the party.

Ms Wolfe said the Sunrise movement has tried to adjust its message for a state like Georgia by “making sure we localize the Green New Deal in a way that resonates with southerners.” For example, canvassers point out how climate change is affecting the air Georgians breathe, she said.

Other groups are also injecting money and resources into the state.

The Progressive Change Campaign Committee has already raised $ 386,000 for the two Democratic candidates. MoveOn, a progressive group, hopes to mobilize many of its 250,000 members in Georgia, and more nationally, to solicit and call the state bank. Our Revolution, the political organization that emerged from Bernie Sanders’ presidential campaign in 2016, is currently reaching out to its 50,000 member households in the state to encourage them to request postal ballots.

“We are moving heaven and earth and deploying all our resources as much as possible to help us win these two seats in Georgia,” said Jamaal Bowman, a Democrat from New York who will be sworn in at the next Congress.

Mr Bowman said he spoke recently with Stacey Abrams, who narrowly lost the Georgia governor’s race in 2018 and is widely recognized for her voter turnout initiatives that have helped turn Georgia blue this year, to see how he could support his efforts. And he said he and other progressives in the House – including “The Squad,” a now growing group that started with four congresswomen of color – were strategizing on how to help in Georgia.

“Georgia is not New York. It’s not California. It has its own culture, ”said Mr. Bowman. “But it’s a culture rooted in justice for all, and we just want to make sure we support this initiative as much as possible, as representatives from other parts of the country.

Amid deepening ideological fault lines among Democrats over messaging and electoral strategy – divisions that have come to light as the party takes stock of its painful losses in the ballot – the two elections to the Senate run-offs will also be a test of whether progressives can balance their broad calls for change with the realities of campaigning in a once reliable Republican state.

Defeating two Republican incumbents, Senators David Perdue and Kelly Loeffler, will not be an easy task for MM. Ossoff and Warnock. Yet the racial competitiveness and the gradual focus on Georgia underscore the political evolution taking place in the state.

Mr. Biden was the first Democratic presidential candidate to win the state since Bill Clinton in 1992. And although Georgia today does not have a reputation for being a hotbed of liberalism, some organizers and strategists alike. inside and outside Georgia claim that it is becoming more and more receptive to leftist ideas.

While many of the Democrats who won in Georgia last month were more moderate, including Carolyn Bourdeaux, who toppled a longtime Republican neighborhood in metropolitan Atlanta, several local progressive candidates won further in the ballot. . Among them, Nicole Love Hendrickson, who became the first black person to be elected chair of the Gwinnett County commission, in suburban Atlanta.

Progressives do not see Georgia as a one-time venture in 2020, but as a priority target of their efforts for years to come.

“Is Georgia a Level 1 State? Is Georgia a progressive state? Are we building a new Georgia? Yes, yes and yes, ”said Britney Whaley, political strategist for the Working Families Party, a progressive group that has been operating in Georgia since 2018 and which has supported Mr. Warnock.

Nse Ufot, the managing director of the New Georgia Project, which was founded by Ms. Abrams and registered hundreds of thousands of new voters, said there was still “an obsession with the return of moderate white men to the Democratic Party. “. But that thought was wrong, she said, even – and perhaps especially – in Georgia.

“It just feels like people don’t understand and understand what it takes to win and what it takes to win in the South,” she said. “We can contribute to this progressive majority – it’s just that they can’t be race blind. It cannot be racially neutral.

There are many signs that the Liberals still face an uphill battle in Georgia. Mr Sanders, the Vermont senator and progressive standard-bearer, lost Georgia’s Democratic presidential primary to Hillary Clinton by more than 40 percentage points in 2016 (Mr Sanders had dropped out of the race by the time Georgia held his primary in June. an.)

Mr Biden defeated President Trump in Georgia by making significant gains among affluent, college-educated and older voters in suburban Atlanta, according to an analysis of the New York Times Upshot results; at the same time, the black part of the electorate fell to its lowest level since 2006.

These findings indicate that Democrats must still depend on the support of traditionally conservative voters to win statewide – rather than forming a progressive majority led by young voters and non-white voters.

Even if Democrats win both seats in Georgia’s Senate, progressives will still face significant hurdles in getting their policies through. The 50 Democratic senators are unlikely to support a left-wing political proposal such as the expansion of the Supreme Court, or for Mr. Biden to support it.

Representative Ro Khanna of California, first vice-chair of the Congressional Progressive Caucus, said the Georgia races were about “the here and now.”

“We understand the issues, and every progressive group I know has made it a priority with the same passion and determination as to reclaim the presidency,” he said.

But he also said the movement’s horizon is long. Even if Democrats fail to take control of the Senate, he said, progressives should try to push through a House agenda that includes policy goals less transformative than Medicare for All – including increasing minimum wage, cancellation of student debt, and expansion of access to Medicare.

“I don’t think their outcome should determine the boldness of our program,” Khanna said, referring to the second round in Georgia. “The mistake would be to back down.”

For the left wing of the party, the potential limits of a progressive program have not dampened resolve.

In a fundraising email last month, Senator Elizabeth Warren of Massachusetts hailed Mr. Biden’s success as proof that “the road to victory in Georgia is clearer than ever.”

Then she called out: “Democrats can win these two Senate races too – and we have to.”